Are Baidu, Alibaba and Tencent (BAT) mere imitations of Google, Amazon and Facebook (GAF)?
The question whether Baidu, Alibaba and Tencent (BAT) are mere imitations of Google, Amazon and Facebook (GAF) has been bothering me for more than a decade. As a Science and Technology Studies (STS) scholar with a technological background in ICT and a research focus on China, it follows me like Peter Pan’s shadow. Friends and colleagues tell me that they see BAT as Chinese GAF - “they are doing the same things you see” - and my accounts of Alibaba or Tencent’s “innovative things” don’t seem to convince them.
In many ways, I agree with them. For the last few decades, China has been imitating - I would say has had to imitate - the West to fit into the system of international operations and to trade under market economy rules.
So in my quest to solve this dilemma, in 2015–2017, I led a research project: “Convergence or differentiation in IP protection? A case study of new models for digital film, music and e-fiction production and distribution in China”[1]. What I - and my colleagues from China, Peking, Tsinghua and Shanghai Jiaotong Universities and S&T policy institutes in Chinese Acadamy of Science and the STS networks in Europe - found is that indeed, BAT were GAF initially. Baidu modelled Google, Alibaba modelled eBay and Amazon, and Tencent resembled social media sites in the West, such as Facebook and Twitter. However, at the time of our research, Baidu, Alibaba and Tencent had all expanded their services into music, literature, film and TV. They were creating content as well as distributing it and making substantial investments.
Undoubtedly, there is copying involved. Baidu, Alibaba and Tencent copy a wide range of services from the West and adapt them to serve the local market. They copy each other. But over time, many of the services that they rolled out have come to differ more and more from each other, and now what makes them stand out is their innovation.[2]
For example, looking at online music, Alibaba’s “Xiami Musician” service platform has been a driving force for fostering grassroots musicians. It targets unknown, amateur and would-be musicians by bringing out their debut albums and giving them a wide audience. It links them with enterprises in Alibaba’s core business and e-commerce networks, which include event agents, recording studios, and professional services. As a result, they can hand-pick and assist promising performers with music recording, stage concert organisation, and live broadcasting online.
Similarly, Tencent’s QQ Music platform has its own featured services embedded in its social media foundation and uses online and real-time communications between individuals and groups. Through its “All-People’s Karaoke” (quanmingK-ge) 400 million users can share their recordings of singing and performing with friends, family and relatives, or, if they are confident enough, with a wider audience. The app includes music editing too - a boon for budding singers. Users’ performances may be rated and receive a “gift” (free or paid for) sent by listeners. Highly rated performances may be invited to join the competitions organised by Tencent. It could - and has - propelled outstanding performers to stardom.
These services provided by BAT in China are free or nearly free, and don’t discriminate against non-fee paying users. Everyone can access the same range of music collections on their platform, though they may have to wait for a week or so for new releases. More interestingly, everyone can accumulate credit points by contributing to the services in a variety of ways including simply visiting platforms daily, using music apps, providing lyrics, translating lyrics from a foreign language into Chinese, introducing friends, etc. The credits accumulated have monetary value and can be used for shopping online.
Of the internet giants that provide online music services in China, only Tencent claims that it has made a profit. While all of them are still heavily investing, not only in music but also literature and film & TV services, the outcomes are not merely growth in content production and distribution, but also the rapid development of the creative culture sectors. Fast-expanding user-participation has great appeal to the Chinese internet giants such as BAT, and “prosumers” is perhaps the best word to capture the specific features of the online creative culture landscape developing there.
“We have not made any money on digital music, quite the opposite, in music, we have been burning money [sic], lots of it …”, I was told while interviewing a senior manager in Baidu during my research. “Today, the most valuable thing for internet companies like us is ‘liuliang’”. “Liuliang” in Chinese means “the volume of information flow”.
Subsequent interviews with Alibaba taught us that the departments providing new services in the creative culture sectors are not under any pressure to make profits. “We are in development”, said an interviewee who works on online literature, “[and we] try to find best ways to attract and serve our users. We want to know them well; what they like and what book they are reading …”.
Were they “following the money” by doing this? Not necessarily, or not only. One can find the clue from IFPI’s year reports. In 2017, China’s mobile-phone music users were 511.63 million, and music revenue was $292.3m, compared to the US music revenue $5,916.1m and with only 5 million users (IFPI 2019). China’s user size increased by 9.3% from 2016 while the revenue rose only by 6.7%.
This, I would argue, is where we do see at least one profound difference between Chinese internet giants and those in the West. If we imagine a traditional balance scale, Chinese internet giants are balancing user-participation on one side and extractable economic income on the other. Engaging with creative culture, music, film, literature, and services to support them brings these companies closer to users, to knowing what they desire, what they love, what dreams they are chasing. With that knowledge, they can afford to ignore the usual rule of thumb of return-on-investment, and of measuring business success by foreseeable direct economic gains.
Like a domino effect, online music, literature, film (and TV) services further demand faster internet speed and more advanced mobile technologies. Thinking back the time when I was studying 3G mobile in China[3], Huawei was merely a newcomer in mobile technologies, and now it is a leader in the 5G network and handset technologies of the world.
All of this has opened my eyes on how “revolutionary” online businesses like BAT could be in the digital age. Now, it is the people who have power in this emerging internet business world. This change came quickly and quietly and without a noticeable struggle. Shopping in China thirty odd years ago we had to speak submissively and humbly to the salesperson at the counter, and, to get a refund for a poor quality product, one had to master Sun Tzu’s The Art of War. Today, BAT in China have built their future on knowing the people they serve, and the people have become prosumers for them. What they have created has a distinctly Chinese focus, removed from mere imitation.
[1] This work was supported by the UK Arts and Humanities Research Council (AHRC), China Digital Copyright Centre [grant number RGS 116357] and the Research Councils UK, Centre for Copyright and New Business Models in the Creative Economy (CREATe) [AHRC Grant AH/ K000179/1]. https://www.create.ac.uk/blog/2017/11/22/research-blog-series-ip-protection/
[2] For details, see published paper, Digital online music in China - a “laboratory” for business experiment. Shen, X., Williams, R., Zheng, S., Liu, Y., Li, Y. & Gerst, M., Feb 2019, In : Technological Forecasting and Social Change. 139, p. 235–249. https://www.sciencedirect.com/science/article/pii/S0040162517311538
[3] Building ‘mass’ and ‘momentum’: A latecomer country’s passage to large technological systems - the case of China, Shen, X., 6 Sep 2018, In : Technology Analysis and Strategic Management. https://www.tandfonline.com/doi/abs/10.1080/09537325.2018.1519184?journalCode=ctas20
